By Rania El Gamal, Olesya Astakhova and Ahmad Ghaddar
DUBAI/MOSCOW/LONDON (Reuters) - OPEC and Russia will discuss record oil output cuts on Thursday to support prices hammered by the coronavirus crisis but talks are complicated by internal disagreements and the reluctance of the United States to join any action.
Global fuel demand has plunged as much as 30% as measures to fight the virus have grounded aircraft, reduced vehicle usage and curbed economic activity.
Benchmark Brent crude oil prices (LCOc1) hit an 18-year low last month and are trading around $34 a barrel, half their level at the end of 2019, dealing a severe blow to budgets of oil producing nations and high-cost U.S. shale oil industry.
U.S. President Donald Trump said last week a deal he had brokered with OPEC leader Saudi Arabia and Russia could lead to cuts of 10 million to 15 million barrels per day (bpd), or 10% to 15% of global supplies, an unprecedented reduction.
OPEC sources have also indicated such a big cut was possible, if the United States joined in. But Washington has yet to show it is ready to take part.
Kremlin spokesman Dmitry Peskov said a new deal on cuts was "hardly possible" without others participating.
Ministers from OPEC+, which groups the Organization of the Petroleum Exporting Countries, Russia and other oil producers, as well as additional participants, will discuss the issue in a video conference at 1400 GMT. The United States was invited.
Riyadh and Moscow, who fell out when a previous pact on curbing supplies collapsed in March, have signalled that a deal on cuts would depend on the United States reducing output too.
Washington has said U.S. output was falling gradually due to lower prices, which Russia says is not the same as cutting.
Moscow and Riyadh are also struggling to agree between themselves on the levels from which output should be cut.
A source briefed on Saudi policy said the kingdom, the world's biggest oil exporter, was ready to cut 4 million bpd, but only from the elevated April supply level of 12.3 million bpd - not its March level of below 10 million bpd.
Moscow says cuts must be based on levels in the first quarter. Two Russian sources said Russia's maximum cut would be 2 million bpd. Its existing output is about 11.3 million bpd.
NOT ENOUGH
"I'm not sure how Russia and Saudi Arabia would be able to iron out their differences today, it all could be stretched out," said one Russian source, a sentiment echoed by OPEC sources.
Goldman Sachs (NYSE:GS) and UBS both said on Thursday that even big cuts suggested would not be enough and predicted that oil prices could fall back to $20 per barrel or even lower.
"Ultimately, the size of the demand shock is simply too large for a coordinated supply cut," Goldman said in a note.
In the United States, gasoline demand tumbled 48% to 5.1 million bpd in a three-week period to April 3.
Thursday's OPEC+ talks will be followed by a call on Friday between energy ministers from the Group of 20 (G20) major economies, also hosted by Saudi Arabia.
Friday's talks could see importing nations announcing plans to make purchases to build up their strategic reserves and support demand, Fatih Birol, the head of the International Energy Agency, told al Arabiya TV.
Several U.S. states could order private companies to limit production under rarely used powers. The oil regulator in Texas, the largest producer among U.S. states with output of about 5 million bpd, meets on April 14 to discuss possible curbs.
But Trump has not shown any appetite for U.S. cuts, instead he has said he had many options if Saudi Arabia and Russia failed cut output. U.S. senators have called on the White House to impose sanctions on Riyadh, pull out U.S. troops from the kingdom and impose import tariffs on Saudi oil.
Moscow and Riyadh, meanwhile, need to bury differences that erupted at an acrimonious OPEC+ meeting in Vienna in March, when Russia refused to participate in Saudi-backed plans to for cuts.
After that, Riyadh said it would start pumping at its maximum level to increase market share. Moscow initially said it would follow suit but rowed back as oil prices tumbled amid the flood of extra crude in an already oversupplied market.
Russian TASS news agency said any cuts that are agreed could last three months starting from May.
The largest one-off cut OPEC has ever agreed till now was 2.2 million bpd in 2008.